2nd-tier cities hotbed for ITES firms

July 24, 2004 10:25 IST

Second-tier cities like Visakhapatnam and Vijayawada will be the new destinations of information technology-enabled services in the future, said Manish Soman, managing director of Deloitte Consulting India Private Limited.

Delivering the keynote address at the one-day national workshop on 'Business Process Outsourcing -- Growing up in Value Chain' in Hyderabad on Friday, Soman said that emphasis would be more on ITES work than on just IT services hereafter in India.

"The estimation is that by 2008 around 20 per cent of the gross domestic product is expected to come from the Indian IT industry," he said.

He said that the steps taken by the BPO industry in the country were "just baby steps and the companies need to develop on the foundation laid over the last couple of years. We must make companies understand that work should be outsourced to India because we provide better quality rather than because of lower costs."

Ajay Sawhney, state secretary (IT and communications), reiterated the government's support to the industry.

"We are also looking at places which have good educational institutions to be developed at the destinations for the IT industry to grow," he said.

According to Sawhney, the government has identified around 10 second-tier cities and would take necessary steps in the next 12-18 months to develop them as the next IT destinations in the state.

Earlier, O P Goenka, president of the Federation of the Andhra Pradesh Chamber of Commerce and Industry, said that Nasscom estimated the size of the BPO industry in the country at around $24 billion by 2008.

"This represents an estimated annual compounded growth of around 58 per cent from 2002 to 2008 making it the fastest growing opportunity in the country," Goenka said.

Goenka said that the industry was changing as providers of BPO services and higher-end services rather than remaining mere call centres or carrying out routine data crushing tasks.